Copyright © 2021 Albuquerque Journal
SANTA FE – New Mexico’s teacher pension fund would benefit from stepped-up taxpayer-funded contributions under a bill that won Senate approval Thursday.
Senators voted 36-6 to pass the measure, Senate Bill 42, which would also extend for two more years a program for retired educators who return to the classroom.
The legislation is sponsored by Senate President Pro Tem Mimi Stewart, D-Albuquerque, a retired teacher who said changes are necessary to put the Educational Retirement Board on more stable financial footing.
“I really think maintaining the viability of the fund is a commitment New Mexico makes to its educators,” Stewart said during Thursday’s floor debate.
Specifically, the bill would increase the taxpayer-funded employer contribution rate paid into the pension fund by 1 percentage point over each of the next four years – taking the rate from 14.15% to 18.15% by the 2025 budget year. Employee contribution rates into the fund would not change.
Increasing the employer contribution rate would not be cheap for the state. The estimated price tag would start with an additional $34 million in the coming year and rise to an additional $136.2 million by 2025, according to a fiscal analysis of the legislation.
Sen. William Sharer, R-Farmington, who voted against the proposal, said lawmakers should look at structural changes to the ERB – not just higher contribution rates.
“I agree we need to fix this … but I don’t think this solves the problem,” Sharer said.
Financial concerns over New Mexico’s two large public retirement systems have played a key role in downgrades to the state’s credit rating in recent years.
While it’s not in danger of short-term insolvency, the ERB had an unfunded liability of $9 billion as of July, a figure that reflects the difference between assets on hand and current and future benefits owed.
But several senators pointed out that, even if approved, the stepped-up ERB employer contribution rate would still be smaller than the taxpayer-funded contribution rate for state employees under New Mexico’s other pension fund, the Public Employees Retirement Association.
“This is a dollar fix that has to happen,” said Sen. George Muñoz, D-Gallup.
For her part, Jan Goodwin, the ERB’s executive director, said she was pleased with Thursday’s vote in the Senate, which sent the bill on to the House for consideration.
“The strong bipartisan support for this bill acknowledges that this is well-needed legislation,” Goodwin told the Journal.
The teacher pension fund currently has more than 61,000 active members and pays benefits to nearly 51,400 retirees.